Construction Contracts & Commercial Consultants

Alway Associates

Archived Newsletters

Quarterly Email Bulletin - March 2006

Construction Act Review

Following a lengthy review process and industry consultation period, new government proposals that aim to improve payments to firms in the construction industry were published on 16 January 2006.

These proposals form part of the analysis of the 356 responses to the joint consultation "Improving Payment Practices in the Construction Industry" held last year. The consultation proposed a number of amendments to Part II of the Housing Grants Construction and Regeneration Act 1996 and the Scheme for Construction Contracts (England and Wales) Regulations 1998. These proposals are summarised below. Proposals. The new proposals include:

Proposals.

The new proposals include:

• introducing a requirement that certification of the sum due, by one of the contracting parties or a third party, becomes an essential feature of contractual payment mechanisms;
• removing the section 110(2) requirement for a payer notice;
• introducing a right to apply for payment where a certificate is not issued by the due date;
• making certain payment mechanisms including pay-when-certified clauses ineffective;
• enhancing the existing right of suspension under the Construction Act to allow the suspending party to claim for loss and expense;
• prohibiting the use of trustee stakeholder accounts for awards made by adjudicators;
• making "final and conclusive" clauses unenforceable where they apply to decisions under the contract that are of substance to interim payments only;
• taking forward the Government's existing commitment to make contractual agreements on adjudication costs unenforceable and to provide a statutory framework for alllocating them, including cases where adjudicators resign in response to a challenge to jurisdiction.

The next step in the process will see the Government working with the construction industry over the coming months to ensure that, when amendments are published for further consultation, they are based upon a clear and thorough understanding of all the issues.

(The above is extracted from an article by Peter Barnes. If you want to see the full article click here.)

• HSE to implement the revised Construction (Design and Management) (CDM) Regulations in Spring 2007

The Health & Safety Commission (HSC) has postponed this implementation from the 1st October 2006. The new regulations involve the combining, and revision, of the existing CDM Regulations 1994 and the Construction (Health Safety and Welfare) (CHSW) regulations 1996. The HSC have decided that the new regulations should be supported by an approved code of practice (ACoP) and industry produced guidance. In order to allow the industry time to prepare for the new regulatory changes the HSE plan to make a final draft of the ACoP available 3 months in advance of the regulations coming into force.

Frequently Asked Questions

On the 1st March 2005 we started our free of charge helpline. As all of our existing clients will know to their benefit, we have always been willing to offer over the phone initial advice on any specific matter at no cost. Not surprisingly we have noticed that some subjects are asked about more often than others. To this end we have decided to include this section on our newsletter which will address some of the issues that have been raised.

• Were working on a JCT Contracts and the Architect has accused us of not using our best endeavours. What is required for a contractor us to have satisfied this obligation?

In this context, the Contractor must do everything reasonably practical to prevent delay, short of incurring substantial additional expenditure.

• I’m involved in an arbitration and I’ve been advised to make a Calderabank offer. What is it?

In arbitration it is an offer to settle made ‘without prejudice save as to costs’ after the case of Calderbank v. Calderbank (1975) 3 All ER 333. The Arbitrator is not to be made aware of the offer until he has issued his award on all matters with the exception of costs. When deciding costs the Arbitrator may treat the offer as having the same effect as a payment into court. The offer must:

• be open for acceptance for 21 days
• include for payment of the other party’s reasonable costs incurred up to date of acceptance if accepted within 21 days. Thereafter, any acceptance of the offer is subject to the offeror’s costs being paid after the expiry of the 21 days.
• deal with the matter of interest. Interest is normally included.
• state whether any counterclaim is taken into account in the offer.
  
  
• Is the issuing of a notice under clause 25 of JCT 1998, a condition precedent to being granted an extension of time?

A condition precedent is a provision which makes the rights or duties of the parties dependent upon the happening of an event. In JCT it is not a condition precedent that a Contractor issue a notice of delay, for the Architect is obliged 12 weeks after practical completion to consider the Contractor’s entitlement irrespective as to whether any delay notices have been issued

If you have a problem or question relating to a construction contract, be it legal or commercial, and want to speak to an expert in the field then call our free helpline on:

0845 838 2759

The helpline is open Monday to Friday from 9.30am to 4.30pm and gives you the opportunity to speak over the phone to our experts who will give clear and practical advice based on their extensive experience.

Recent Articles

For more in depth information on topics related to the industry we regularly post new articles on our website. Article recently posted have included:

• Construction Act Review (January 2006)
• Commencing Adjudication Proceedings
• When contracts are not in writing
• Professional Negligence
• Contractors Liabilities in respect of Building Defects

To read these and search for other articles click here.

Company News

• Investors in People – During December 2005 Alway Associates became recognised as an Investors in People company. In particular the assessor complimented the company on it focus in developing the range of experience and knowledge of our consultants.
• New Birmingham Office - At the beginning of April we will be opening a new office in Birmingham. For more details email birmingham@alway-associate.co.uk
• Congratulations to Michael Rowlinson on his being made a Fellow of the Institution of Civil Engineering Surveyors. As well as this Michael’s recent series of articles on the new NEC3 published in Civil Engineering Surveyor are also to be published by the NEC users group.
• Congratulations also to Nigel Clayton at our Sheffield office who has qualified as a Member of the Associations of Project Managers.

Forthcoming Events / Seminars

Alway Associates hold regular events around the country. The following are some of the next events coming up and links to book your place: Free of charge breakfast seminars:

• Design - What every Contractor and Consultant needs to know – 29th March 2006 – London.
• Consultation paper on the Construction Act – 12th April 2006 – Cardiff
• Payment and Avoiding Contra Charges - 25th April 2006- London
• Avoiding/Defending Claims from Contractors - what every contractor needs to know – 24th May 2006 - London
• Programming and Planning - What every contractor should know - June 2006 – West Bromwich, Solihull and Sheffield –

Public Seminars

• The Standard Form of Sub-Contract DOM/2 Its management from the perspective of a Sub-Contractor - 15 March 2006 - Cardiff
• The Standard Forms of Main and Sub-Contract - 4 April 2006 - Cardiff
• The Standard Forms of Main and Sub-Contract - 5 April 2006- Bristol
• Arbitration in construction disputes - 19 April 2006 – Cardiff

Events with other organisations

• ICES Anglia and Central region AGM – 6th April 2006. Peter Barnes will be presenting on the NEC 3rd Edition including a detailed assessment of the compensation event.

Alway Associates:
Construction Law, Contracts & Commercial Consultants  www.alway-associates.co.uk